Is FATRX a Strong Bond Fund Right Now?

If you have been looking for Investment Grade - Bonds: Misc funds, it would not be wise to start your search with Frost Total Return Bond Investor (FATRX). FATRX carries a Zacks Mutual Fund Rank of 5 (Strong Sell), which is based on nine forecasting factors like size, cost, and past performance.


We classify FATRX in the Investment Grade - Bonds: Misc, as area rife with many potential choices. Investment Grade - Bonds: Misc funds are not focused on one part of the curve and often hold a variety of investment grade credit levels. However, this means that funds in this category may not be directly comparable, and duration risk will depend on a given fund's profile. Also, these funds tend to be safer because of their focus on investment grade, but yields will be lower than could be found in the junk bond category.

History of Fund/Manager

Frost Funds is based in San Antonio, Tx, and is the manager of FATRX. Frost Total Return Bond Investor made its debut in July of 2008, and since then, FATRX has accumulated about $437.85 million in assets, per the most up-to-date date available. The fund's current manager, Jeffery Elswick, has been in charge of the fund since July of 2008.


Obviously, what investors are looking for in these funds is strong performance relative to their peers. This fund has delivered a 5-year annualized total return of 2.5%, and is in the middle third among its category peers. Investors who prefer analyzing shorter time frames should look at its 3-year annualized total return of 1.92%, which places it in the bottom third during this time-frame.

When looking at a fund's performance, it is also important to note the standard deviation of the returns. The lower the standard deviation, the less volatility the fund experiences. Compared to the category average of 7.6%, the standard deviation of FATRX over the past three years is 4.72%. Over the past 5 years, the standard deviation of the fund is 3.93% compared to the category average of 6.88%. This makes the fund less volatile than its peers over the past half-decade.

This fund has a beta of 0.66, meaning that it is less volatile than a broad market index of fixed income securities. Taking this into account, FATRX has a negative alpha of -0.35, which measures performance on a risk-adjusted basis.


Investors should also consider a bond's rating, which is a grade ( 'AAA' to 'D' ) given to a bond that indicates its credit quality. With this letter scale in mind, FATRX has 68.45% in high quality bonds rated at least 'AA' or higher. The fund has an average quality of AA, and focuses on high quality securities.


As competition heats up in the mutual fund market, costs become increasingly important. Compared to its otherwise identical counterpart, a low-cost product will be an outperformer, all other things being equal. Thus, taking a closer look at cost-related metrics is vital for investors. In terms of fees, FATRX is a no load fund. It has an expense ratio of 0.71% compared to the category average of 0.95%. FATRX is actually cheaper than its peers when you consider factors like cost.

While the minimum initial investment for the product is $2,500, investors should also note that each subsequent investment needs to be at least $500.

Bottom Line

Overall, Frost Total Return Bond Investor ( FATRX ) has a low Zacks Mutual Fund rank, and in conjunction with its comparatively similar performance, average downside risk, and lower fees, Frost Total Return Bond Investor ( FATRX ) looks like a somewhat weak choice for investors right now.

For additional information on the Investment Grade - Bonds: Misc area of the mutual fund world, make sure to check out There, you can see more about the ranking process, and dive even deeper into FATRX too for additional information. Zacks provides a full suite of tools to help you analyze your portfolio - both funds and stocks - in the most efficient way possible.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


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